Institute fights for SME audits

AUDITS for small to medium-sized enterprises have been stridently defended by the ICAEW.

Michael Izza, chief executive of the professional body, said audits stoke confidence in modest-sized companies and provide significant value.

He was responding to Vince Cable’s call to lower audit thresholds, the most recent manifestation of which is an employee number test that could allow the exemption of outfits with 50 or fewer employees.

One further criterion is needed to qualify; either a turnover below the current threshold of £6.5 million, or a balance sheet total lower than £3.26 million.

The employee number test will bring UK rules in line with other EU members, but Izza warns many additional companies will be exempted as a result, such as service industry outfits with limited assets.

Izza said the government “instinctively wants to be deregulatory”, claiming there are a number of barriers to loosening audit requirements. He pointed to the difficulty of amending EU law and said the EC green papers on audit and corporate governance are the immediate policy priorities.

For more visit Izza’s blog here.

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